The report says technology key for economic well-being.
Canada’s most considerable supply of lumber is in Marshall McLuhan’s global village; Canada’s small and medium-sized businesses can do better.
In its Global Competitiveness Report, The World Economic Forum reviewed 102 economies of 2003-04 and produced the networked readiness index (NRI). The NRI measures the degree of preparation required for Canada and other countries to participate in and benefit from technology and telecom developments.
The index placed Canada after the United States, Singapore, Finland, Sweden and Denmark. We must do better.
Yes, there has been an unexpected confluence of variables beyond the control of Canada’s small and medium-sized enterprises (SMEs), including constricted border crossings, increasingly volatile foreign exchange dealings and growing American protectionism. These and other factors contribute to our decreasing productivity.
Size and reputation are not enough. During the 1980s, 46 percent of the top Fortune 500 companies ceased to exist. The golden age of marketing that claimed homogeneous markets, predictable consumer behaviour and mass marketing as key success factors are long gone.
Today the market is highly fragmented and complex. Increasingly, SMEs are faced with a complex world where change is endemic. You cannot adopt a mental model of ‘plot it and forget it.’ How can Canadian SMEs close the national competitive gap with our American cousins?
Consider the words of former General Electric CEO Jack Welch, who has been quoted as saying, “Look at the world the way it is, not the way you think it should be.”
According to Industry Canada, SMEs represent 99.7 percent of Canada’s one-million employer businesses. Collectively, SMEs are Canada’s economic engine.
It is well recognized that one of the most powerful drivers of globalization is technology. SMEs must exploit the power of information and communication technologies (ICT) for their economic well-being. Accordingly, if Canadian national ICT competitiveness is to improve, SMEs must make it happen.
Federal statistics show Canada’s exports to the U.S., although down from last year’s high of 85 percent, remain at a healthy 79 percent of total exports.
SMEs can be a ‘value builder’ and take charge of their own destinies. They must adopt a new mental model that is driven by long-term growth rather than short-term bottom-line considerations. There are variables beyond the SME’s entrepreneurial control, but they can be controlled.
For growth, SMEs will have to undertake proactive geographic expansion rather than simply maintaining their share of the local markets. This will mean a significant shift from the current dependency on the U.S. market.
Where should SMEs look? The answer lies in new emerging markets. Did you know that the exponential increase in China’s standard of living will increase that country’s eligible consumers tenfold by 2015? By 2020, China’s GNP is expected to be equal to that of the United States. India has been freed of its regulatory and bureaucratic chains and is now stalking the global markets with the other Asian tigers. India’s GNP will also exceed that of the U.S. shortly after China achieves this milestone.
Canada’s small and medium-sized businesses must exploit new emerging technologies faster and smarter than the global competition.
Have you explored the possibility of voice-over-Internet protocol (VoIP), digital media, broadband, WiFi, WiMax and 3G technology? Indeed, how many SMEs have heard the terms? Your competitors have.
Second, SMEs need to utilize the tools of e-business. By exploiting global network-enabled connections, accessing global markets easily, matching buyers and sellers across national boundaries, and saving transaction costs through efficient distribution tools, SMEs can play in the “sandbox” with larger multinational organizations.
Third, SMEs need to understand the global village in order to engage it. It is the duty of SMEs’ management to constantly scan the ecosystem and identify, at the earliest possibility, exploitable emerging opportunities and threats that have to be mitigated.
Fourth, lobby the government. Governments at all levels have a role in creating national competitiveness by:
* Enhancing infrastructure, education, research, transportation, science and information technology. Unfortunately, last month’s federal budget did little to improve the situation.
* Creating an environment where consumers and society demand stringent standards. For example, why does Japan lead the world in camera technology? Because Japanese consumers and government demand the best.
* Deregulating industry, monopolies and eliminating inter-provincial trade barriers. It is estimated that Canada wastes more than $11 billion in national competitiveness because of inter-provincial trade barriers at a time when global barriers are falling.
* Adopting strong antitrust policies. Mergers, collaboration, barriers to entry and fixing prices all stifle innovation. Notice the cost of gas moving up, more choreographed than synchronized swimmers!
* Encouraging and enhancing sustained investment. For example, make the tax rate for long-term capital gains to support new corporate equity investment more attractive.
More than ever, we must all intensify our efforts to enable individuals, businesses, and governments to benefit more fully from the use and application of technology and telecom advances. There is no international how-to playbook – SMEs must simply get in the game.
Note: This article was originally published in 2005.
